In Week 36 we asked how businesses determine which options matter.

Enhanced materiality provides part of the answer by helping senior decision makers understand significant impacts, risks, opportunities and dependencies across the value chain.

But identifying what matters is not the destination.

It is the beginning.

A beautifully constructed materiality assessment sitting inside a sustainability report will not make an organisation more resilient.

A materiality matrix will not strengthen a supply chain.

A risk description will not retain critical employees.

An assessment of water dependency will not reduce water consumption.

Identifying a human rights impact will not correct it.

Recognising a market opportunity will not capture it.

Information creates value when it changes decisions and action.

That is the next step in building business resilience.

Materiality must lead somewhere

GRI 3 provides an important clue.

The Standard does not stop when an organisation identifies its material topics.

Disclosure 3 3 requires organisations to explain how each material topic is managed, including policies and commitments, actions taken, processes for tracking effectiveness, goals, targets and indicators, progress, lessons learned and the role of stakeholder engagement (Global Reporting Initiative, 2021).

That progression matters.

It takes us from:

What matters?

to

What are we doing about it?

The OECD Due Diligence Guidance for Responsible Business Conduct follows a similar logic.

Organisations are expected to identify and assess adverse impacts, take action to cease, prevent or mitigate them, track implementation and results, communicate what they are doing and provide or cooperate in remediation where appropriate (OECD, 2018).

Again, the emphasis is not simply on knowing.

It is on acting and learning.

Enhanced materiality should support decisions

FBRH trains professionals to undertake enhanced materiality.

The approach begins with the impact perspective of the GRI Standards and adds the financial perspective associated with double materiality.

It looks across the value chain to understand:

how the organisation affects the economy, environment and people

and

how sustainability related matters can create risks, opportunities and financial effects for the organisation.

EFRAG recognises these connections explicitly.

Its materiality guidance explains that material risks and opportunities can arise from impacts, dependencies and other factors, and that these matters can interact with strategy, investment and management decisions (EFRAG, 2024).

This is precisely why enhanced materiality has value beyond sustainability reporting.

It creates a structured information base for senior decision makers.

But the process becomes strategically useful only when management asks:

What decision should this information influence?

From material topic to management decision

Imagine that enhanced materiality identifies water scarcity as significant.

The reporting question might be:

What should we disclose about water?

The management questions are broader.

Where is the organisation most dependent on water?

Which facilities or suppliers are most exposed?

Could scarcity interrupt production?

What are the implications for communities?

Could costs rise?

Are alternative sources available?

Could processes use less water?

Should investment priorities change?

What indicators would provide early warning?

Who is responsible for responding?

The same principle applies to human capital.

Suppose the assessment identifies dependence on a small number of employees with critical expertise.

The reporting question may concern training, retention or employee turnover.

The resilience questions are different.

What happens if those people leave?

Who else understands the process?

Can knowledge be transferred?

Should succession plans be developed?

Does the organisation need additional capability?

Can technology reduce the dependency?

Again, information begins the conversation.

Decisions create the response.

Every material matter should create a management conversation

One way of ensuring that enhanced materiality contributes to resilience is to connect each significant matter with a clear management discussion.

For every important impact, risk, opportunity or dependency, senior decision makers should be able to ask:

What is happening?

↓

Why does it matter?

↓

Who or what is affected?

↓

What could this mean for the organisation and its stakeholders?

↓

What decision is required?

↓

Who owns that decision?

↓

What action will be taken?

↓

How will we know whether the action worked?

↓

What have we learned?

This converts materiality from a reporting process into a management process.

The value chain makes action more complicated

Not every material matter can be solved inside the organisation.

Many of the most important sustainability impacts and business dependencies exist within the value chain.

The OECD notes that significant environmental and social impacts often occur within supply and value chains rather than solely within an organisation’s own operations (OECD, 2026).

That means action may require collaboration.

A supplier may need support.

Procurement criteria may need changing.

Contracts may need reviewing.

Products may need redesigning.

New suppliers may need developing.

Customers may need engaging.

Industry bodies may need coordinating collective action.

Communities may need to be consulted.

Expert knowledge may be required.

The appropriate response depends on the nature of the matter and the organisation’s relationship with it.

This is another reason why simplistic sustainability checklists are inadequate.

Professional judgement matters.

Prioritisation must continue after materiality

A materiality assessment establishes priorities.

But management still needs to prioritise actions.

Consider an organisation that identifies ten significant sustainability matters.

It may identify dozens of possible responses.

Management cannot implement everything immediately.

The next question becomes:

Where can action create the greatest value?

That value can take several forms.

Reducing a significant negative impact.

Avoiding disruption.

Protecting people.

Improving operational efficiency.

Strengthening a supplier relationship.

Reducing cost.

Increasing access to markets.

Developing new products.

Building stakeholder trust.

Protecting natural resources on which the organisation depends.

Improving access to finance.

Creating greater strategic flexibility.

The objective is not to reduce every decision to a financial calculation.

Nor is it to ignore financial consequences.

Enhanced materiality allows decision makers to consider both.

That is why we describe the intended outcome as creating lasting value:

for the business

for stakeholders

and for the planet.

Actions need owners

There is another common problem.

Everyone agrees that a topic is important.

Nobody owns it.

If a material issue has no clear organisational responsibility, action can easily disappear between sustainability, finance, operations, procurement, human resources, risk and senior management.

Business resilience requires ownership.

Some matters may require board oversight.

Others belong with executive management.

Others may sit with procurement, operations, human resources or another business function.

Many will cross functional boundaries.

The important point is that material sustainability information should reach the people capable of acting on it.

A sustainability team cannot create organisational resilience alone.

Measure whether the action worked

Action without measurement creates another problem.

The organisation may be busy without knowing whether it is making progress.

GRI 3 specifically requires organisations to report how they track the effectiveness of actions taken to manage material topics, including goals, targets, indicators, progress and lessons learned (Global Reporting Initiative, 2021).

This creates a powerful management cycle:

identify

↓

prioritise

↓

decide

↓

act

↓

measure

↓

learn

↓

adapt

That final stage is particularly important for resilience.

Conditions change.

An action that worked yesterday may not work tomorrow.

A supplier improves.

A new regulation appears.

Technology changes.

A risk becomes less important.

Another becomes more significant.

A new opportunity emerges.

The organisation therefore needs to learn and adapt.

ISO 22316 describes organisational resilience as the ability to absorb and adapt in a changing environment while continuing to fulfil organisational objectives (ISO, 2017).

Adaptation requires feedback.

From reporting cycle to learning cycle

This changes how we can think about sustainability reporting.

The traditional model can appear linear:

collect data

↓

write report

↓

publish report

↓

repeat next year

A resilience based approach should be circular.

understand

↓

identify

↓

prioritise

↓

decide

↓

act

↓

measure

↓

learn

↓

understand again

The report is an important output.

But organisational learning may be an even more valuable one.

Capability determines whether this works

None of this happens automatically.

People need the capability to conduct a robust materiality assessment.

They need to understand the organisation and its value chain.

They need to identify impacts, risks, opportunities and dependencies.

They need to gather and evaluate evidence.

They need to understand stakeholder perspectives.

They need to know when expert input is required.

They need to assess significance and financial effects.

They need to apply professional judgement.

And critically, they need to communicate the results in a form that senior decision makers can use.

This is why FBRH training focuses on implementation rather than simply understanding disclosure requirements.

Through the GRI Reporting Programme: From Understanding to Implementation, participants learn how to apply the GRI Standards and undertake enhanced materiality across the value chain.

The objective is to develop internal capability.

Not simply to produce a report.

But to generate information that supports better decisions.

Training, action and assurance have different roles

There is also an important distinction between training and assurance.

Training develops capability.

It helps organisations develop the people, knowledge and processes required to generate and use sustainability information.

Management takes decisions and action.

The organisation remains responsible for determining its strategy, priorities and responses.

Independent assurance strengthens confidence.

Assurance evaluates sustainability information against suitable criteria and appropriate evidence.

These roles should remain distinct.

FBRH does not disguise organisation specific consulting as training.

Our training provides methods, frameworks, templates and exercises that organisations can apply using their own judgement.

Independent assurance is conducted separately and subject to appropriate ethical and independence requirements.

Why assurance becomes more relevant

As sustainability information moves closer to strategic decisions, its reliability becomes increasingly important.

Senior decision makers may be using that information to allocate resources.

Customers may use it to select suppliers.

Banks may consider it when evaluating clients.

Stakeholders may use it to assess organisational performance.

Boards may use it when overseeing risks and opportunities.

The question therefore becomes:

Can we rely on this information?

ISSA 5000 has been developed as a global baseline for sustainability assurance engagements.

The IAASB’s June 2026 guidance on materiality under ISSA 5000 specifically addresses the information needs of intended users, qualitative and quantitative sustainability information, double materiality where applicable and materiality throughout an assurance engagement in support of decision useful sustainability reporting (IAASB, 2026).

This reinforces the connection between materiality, information quality and decisions.

Assurance does not tell management what decision to make.

But it can strengthen confidence in the sustainability information on which decisions and disclosures may depend.

The pathway from information to resilience

The broader progression therefore becomes:

Understand the organisation and its value chain

↓

Build internal capability

↓

Conduct enhanced materiality

↓

Identify what matters

↓

Provide decision useful information

↓

Make informed decisions

↓

Take action

↓

Measure results

↓

Learn and adapt

↓

Strengthen confidence through assurance where appropriate

↓

Build greater resilience

This is not sustainability reporting sitting beside business strategy.

It is sustainability information contributing to better business strategy.

Knowing is not enough

Knowing that a supplier represents a critical dependency does not create an alternative.

Knowing that employees lack an important future skill does not develop that capability.

Knowing that water scarcity threatens operations does not reduce the exposure.

Knowing that a product creates an impact does not redesign the product.

Knowing that a market opportunity exists does not capture it.

Knowing matters.

But knowing is only valuable if it influences what comes next.

Information must support decisions.

Decisions must lead to action.

Action must be measured.

Results must create learning.

Learning must improve the next decision.

That is how sustainability information contributes to resilience.

And that is how enhanced materiality can move:

from disclosure

↓

to decisions

↓

to actions

↓

to value creation

For the business, stakeholders and the planet.

Simon Pitsillides
Simon Pitsillides is a board adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value creation. He supports boards and senior executives in strengthening governance, enhancing decision-making and integrating sustainability into long-term business strategy.
Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.
As Founder of FBRH Consultants and publisher of SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.
Simon is recognised for helping boards move beyond compliance by using decision-useful sustainability information to strengthen strategy, manage risk, build stakeholder confidence and create long-term value for business, stakeholders and the planet. 

https://www.linkedin.com/in/simon-pitsillides

References

EFRAG (2024) EFRAG IG 1: Materiality Assessment Implementation Guidance. Brussels: European Financial Reporting Advisory Group.

Global Reporting Initiative (2021) GRI 3: Material Topics 2021. Amsterdam: Global Reporting Initiative.

International Auditing and Assurance Standards Board (2026) ISSA 5000 Frequently Asked Questions: The Application of Materiality. New York: IAASB, 25 June.

International Organization for Standardization (2017) ISO 22316:2017 Security and resilience: Organizational resilience: Principles and attributes. Geneva: ISO.

OECD (2018) OECD Due Diligence Guidance for Responsible Business Conduct. Paris: OECD Publishing.

OECD (2026) Due Diligence for Responsible Business Conduct. Paris: Organisation for Economic Co operation and Development. Accessed 20 August 2026.

The post Knowing What Matters Is Not Enough. Resilience Requires Action. appeared first on SustainCase - Sustainability Magazine.

It builds options.

But that raises an important question.

Which options should a business build?

No organisation has unlimited money, time, people or management attention.

It cannot prepare equally for every possible disruption, invest in every opportunity or address every sustainability matter with the same intensity.

Choices have to be made.

And good choices start with understanding what matters.

This is where materiality can become much more than a sustainability reporting requirement.

When applied properly, materiality can help senior decision makers understand the organisation, its value chain, its impacts, dependencies, risks and opportunities.

It can help determine where action is most important.

And that makes materiality a potentially powerful business resilience tool.

The problem is not a shortage of information

Businesses today have access to extraordinary amounts of information.

The challenge is deciding which information deserves attention.

Geopolitical developments.

Artificial intelligence.

Cybersecurity.

Climate related risks.

Energy.

Water.

Human rights.

Supply chains.

Employee capability.

Changing customer expectations.

Regulation.

Access to capital.

Reputation.

New markets.

The list can become overwhelming.

The World Economic Forum’s Global Risks Report 2026 describes a global environment in which geopolitical and geoeconomic risks dominate the immediate outlook, while technological risks continue to grow in importance over longer time horizons (World Economic Forum, 2026).

Trying to respond equally to everything is not strategy.

Leaders have to prioritise.

That requires a disciplined way of answering a deceptively simple question:

What matters most?

Materiality should help answer that question

Within sustainability reporting, materiality is often associated with deciding what should appear in a report.

That is important.

But it is only part of its potential value.

GRI 3 requires organisations reporting in accordance with the GRI Standards to identify and assess actual and potential impacts on the economy, environment and people across their activities and business relationships.

GRI also requires organisations to understand their context and recognises that relevant business relationships can extend through the value chain, including beyond first tier suppliers (Global Reporting Initiative, 2021).

This creates an important foundation.

The organisation begins by looking beyond its immediate boundaries.

It considers where activities take place.

Who is involved.

Who may be affected.

Which resources the business depends upon.

Where significant impacts occur.

And how those circumstances may change.

But we can go further.

From materiality to enhanced materiality

FBRH trains professionals to conduct what we describe as enhanced materiality.

Enhanced materiality builds on the impact perspective of the GRI Standards and incorporates the financial perspective associated with double materiality.

The organisation therefore considers both:

How the organisation affects the economy, environment and people

and

How sustainability related matters can create risks, opportunities and financial effects for the organisation.

EFRAG describes these as the two dimensions of double materiality.

Impact materiality considers significant actual and potential impacts on people and the environment.

Financial materiality considers sustainability related risks and opportunities that could create material financial effects for the organisation.

Importantly, EFRAG recognises that the two perspectives are often interconnected and that material risks and opportunities can arise from impacts and dependencies (EFRAG, 2024).

The entire value chain matters.

That is critical.

A business may have excellent control over its own operations while remaining heavily exposed to something happening upstream or downstream.

Raw materials may become unavailable.

A supplier may create a human rights exposure.

Water scarcity may affect production.

A customer’s expectations may change.

New regulation may alter market access.

Technology may make an existing product less competitive.

Climate related events may affect logistics.

Employees with critical skills may become difficult to recruit.

These matters may begin outside the traditional boundaries of financial reporting.

Their consequences may eventually reach the heart of the business.

Enhanced materiality is about decisions

This is why we believe the most useful question is not:

What do we need to put in the sustainability report?

It is:

What do senior decision makers need to understand in order to make better decisions?

That changes the purpose of the exercise.

Enhanced materiality can provide a structured process:

Understand the organisation and its value chain

↓

Identify actual and potential impacts

↓

Identify related risks, opportunities and dependencies

↓

Gather evidence

↓

Engage relevant stakeholders

↓

Seek appropriate expert input

↓

Assess significance and potential financial effects

↓

Apply professional judgement

↓

Prioritise what matters

↓

Inform decisions and action

↓

Monitor changes and outcomes

This is not simply data collection.

It is a decision making process.

The value chain changes what leaders can see

Looking across the value chain is particularly important for resilience.

Consider a manufacturer.

Its immediate operations may appear stable.

But further upstream it may depend on a raw material sourced predominantly from one country.

A transport route may pass through a region exposed to geopolitical disruption.

A supplier may depend heavily on water resources that are becoming increasingly stressed.

A critical component may come from only one manufacturer.

Further downstream, customer preferences or regulation may be changing.

None of these automatically means that management should change supplier, relocate production or abandon a market.

But they are information that senior decision makers may need.

Understanding the value chain can reveal vulnerabilities before those vulnerabilities become crises.

And it can reveal opportunities before competitors recognise them.

Impact, risk and opportunity are connected

Traditional approaches can sometimes place sustainability impacts in one box and business risks in another.

Reality is rarely so tidy.

Consider workforce conditions.

Poor working conditions create impacts on people.

They may also contribute to absenteeism, recruitment difficulties, employee turnover, operational disruption and reputational damage.

Consider water.

The organisation may affect local water availability.

At the same time, water scarcity may affect production capacity and operating costs.

Consider climate.

A business contributes to greenhouse gas emissions.

At the same time, transition policies, energy costs, physical climate risks and changing market expectations may affect its financial performance.

EFRAG’s double materiality guidance recognises these interconnections. Impacts and dependencies can generate risks and opportunities, while management decisions taken in response to impacts can themselves affect business prospects (EFRAG, 2024).

Enhanced materiality therefore encourages decision makers to see the system rather than isolated sustainability topics.

Better information creates better choices

This connects directly with business resilience.

A business cannot build useful options if it does not understand its exposures.

Imagine discovering during a disruption that your critical supplier has no realistic substitute.

Or that important organisational knowledge exists only in the head of one employee.

Or that a new regulation threatens access to a significant market.

Or that your largest customer is changing procurement requirements and you cannot provide the sustainability information being requested.

The problem is not simply the disruption.

The problem is discovering the dependency too late.

Enhanced materiality can help businesses ask these questions earlier.

That creates time.

And time creates options.

Materiality is not a once a year exercise

GRI explicitly recognises that impacts can change as activities, business relationships and the operating context evolve and therefore expects organisations to identify and assess impacts on an ongoing basis (Global Reporting Initiative, 2021).

This point deserves greater attention.

Materiality should not become an exercise conducted for the sustainability report and then placed on a shelf until the following year.

Businesses change.

Markets change.

Value chains change.

Technology changes.

Stakeholders change.

Risks change.

Opportunities change.

A materiality assessment should therefore contribute to an organisation’s wider capacity to notice change.

ISO 22316 describes organisational resilience as the ability to absorb and adapt in a changing environment while continuing to fulfil organisational objectives. It also emphasises awareness of changing contexts, strong leadership and the ability to anticipate and respond to change (ISO, 2017).

That is precisely why decision useful materiality information matters.

From disclosure to value creation

The sustainability reporting process becomes strategically useful when information moves:

from disclosure

↓

to decisions

↓

to actions

↓

to value creation

A sustainability report is therefore not necessarily the end product.

The more important product may be better organisational understanding.

Senior decision makers can use that understanding to decide:

Where should we strengthen our supply chain?

Where are we excessively dependent?

Which impacts require urgent action?

Which sustainability risks deserve management attention?

Where are new commercial opportunities emerging?

Which capabilities should we develop?

Which stakeholders need to be involved?

Where should capital be allocated?

Where do we need better evidence?

Where should we build alternatives?

These are business questions.

Building the capability to conduct enhanced materiality

Good materiality assessments require more than completing a template.

People need to understand the standards.

They need to understand the business.

They need to know how to identify impacts across the value chain.

They need to distinguish impacts from risks and opportunities.

They need to gather appropriate evidence.

They need to understand stakeholders.

They need to recognise when expert input is needed.

And they need to apply professional judgement.

That capability has to be built.

FBRH’s GRI Reporting Programme: From Understanding to Implementation is designed around this principle.

Participants learn how to use the GRI Standards in a practical organisational context and how to conduct enhanced materiality across the value chain.

The objective is not simply to teach people how to produce disclosures.

It is to help them generate information that can support governance, strategy and better decisions.

The progression is:

Understand

↓

Learn

↓

Start

↓

Grow

↓

Assure

Understand the organisation, its value chain and its sustainability context.

Build internal capability.

Start generating decision useful information.

Improve governance, evidence and processes as capability develops.

Then, where appropriate, strengthen confidence through independent assurance.

The growing role of assurance

As sustainability information becomes more important to decisions, questions naturally arise about its reliability.

Where did the information come from?

What evidence supports it?

Were appropriate criteria applied?

Can important judgements be explained?

Are controls in place?

Can stakeholders have confidence in what is being reported?

This is where independent sustainability assurance has an important but separate role.

ISSA 5000 establishes a global baseline for sustainability assurance engagements and becomes effective for periods beginning on or after 15 December 2026, with early application permitted.

Significantly, the IAASB published additional materiality guidance in June 2026 addressing qualitative and quantitative sustainability information, double materiality where applicable and the role of materiality in supporting decision useful sustainability reporting (IAASB, 2026).

That reinforces an important point.

Materiality is central not only to deciding what matters.

It is also central to the credibility of sustainability information.

FBRH provides independent sustainability assurance, including assurance of GRI Standards based sustainability reporting, subject to appropriate engagement acceptance and independence requirements.

Training and assurance therefore serve different purposes.

Training develops capability.

Assurance strengthens confidence.

Better decisions for business, stakeholders and the planet

Enhanced materiality should not force businesses to choose between commercial value and sustainability value.

Its purpose is to help decision makers understand the connections.

A decision may affect employees, communities, suppliers or the environment.

Those impacts may also create dependencies, risks or opportunities for the organisation.

Understanding both sides of the relationship enables better judgement.

This is the principle behind the FBRH approach.

Generate information that helps senior decision makers take better informed action to create lasting value:

for the business

for stakeholders

and for the planet.

Resilience starts with knowing what matters

Resilience does not mean preparing equally for everything.

That would be impossible.

It means understanding what matters sufficiently well to make informed choices before circumstances remove those choices.

Week 35 asked businesses to build options.

Week 36 adds the next piece.

Before you can build the right options, you need to know what matters.

Enhanced materiality helps organisations identify their significant impacts, risks, opportunities and dependencies across the value chain.

That information supports better decisions.

Better decisions create better actions.

And better actions help create more resilient businesses.

Simon Pitsillides
Simon Pitsillides is a board adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value creation. He supports boards and senior executives in strengthening governance, enhancing decision-making and integrating sustainability into long-term business strategy.
Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.
As Founder of FBRH Consultants and publisher of SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.
Simon is recognised for helping boards move beyond compliance by using decision-useful sustainability information to strengthen strategy, manage risk, build stakeholder confidence and create long-term value for business, stakeholders and the planet. 

https://www.linkedin.com/in/simon-pitsillides

References

EFRAG (2024) EFRAG IG 1: Materiality Assessment Implementation Guidance. Brussels: European Financial Reporting Advisory Group, 31 May.

Global Reporting Initiative (2021) GRI 3: Material Topics 2021. Amsterdam: Global Reporting Initiative.

International Auditing and Assurance Standards Board (2026) ISSA 5000 Frequently Asked Questions: The Application of Materiality. New York: IAASB, 25 June.

International Organization for Standardization (2017) ISO 22316:2017 Security and resilience: Organizational resilience: Principles and attributes. Geneva: ISO.

World Economic Forum (2026) Global Risks Report 2026. Geneva: World Economic Forum.

The post Resilience Starts with Knowing What Matters appeared first on SustainCase - Sustainability Magazine.

They are collecting data, assessing impacts, responding to reporting requirements, engaging stakeholders and preparing increasingly detailed disclosures.

Yet a fundamental question is often overlooked:

Is this information actually improving decisions?

Too often, sustainability information is treated primarily as an output. It is gathered for a report, requested by regulators, reviewed by external advisers or presented to senior management after important decisions have already been made.

The result may be a technically complete report, but not necessarily a better-run organisation.

The purpose of sustainability information should not simply be to produce better reports.

It should be to enable better decisions.

This principle is already reflected in leading international standards. The GRI Standards enable organisations to report transparently on their most significant impacts on the economy, environment and people, while the IFRS Sustainability Disclosure Standards focus on information that is useful to investors when assessing sustainability-related risks and opportunities that could affect an organisation’s prospects (GRI, 2021a; IFRS Foundation, 2023a). (Global Reporting Initiative)

Together, these perspectives underline an important point: sustainability information should support both accountability for organisational impacts and informed economic decision-making.

From Reporting to Decision-Making

Decision-useful sustainability information helps leaders understand:

• what matters most
• where the organisation has its most significant impacts
• which risks and opportunities require attention
• where the organisation is most vulnerable
• what is changing across its value chain
• where management attention and resources should be directed
• how the organisation can adapt and continue creating value

This requires more than collecting data.

It requires organisations to connect sustainability information with strategy, governance, investment, risk management, operations and accountability.

IFRS S1 reflects this connection by organising sustainability-related disclosures around governance, strategy, risk management, and metrics and targets. It requires organisations to communicate the sustainability-related risks and opportunities that could reasonably be expected to affect their prospects over the short, medium and long term (IFRS Foundation, 2023a). (IFRS)

When properly used, sustainability information can support decisions about:

• products and services
• supply chains
• capital allocation
• market entry
• operational priorities
• workforce planning
• stakeholder relationships
• risk management
• innovation
• long-term strategy

In other words, sustainability information becomes useful when it helps decision-makers determine what to do next.

Transparency Still Matters

This is not an argument against transparency.

Organisations have a responsibility to provide clear, balanced and credible information about their impacts, risks, opportunities and performance.

Transparency strengthens accountability. It enables investors, customers, employees, regulators, communities and other stakeholders to make more informed assessments of an organisation’s conduct and performance.

It can also build trust and reduce the risk of selective, exaggerated or misleading disclosure.

The GRI Standards are explicitly designed to enable organisations to report publicly on their most significant impacts, including positive and negative impacts on the economy, environment and people. They also recognise stakeholder engagement and due diligence as important elements in identifying those impacts (GRI, 2021a; GRI, 2021b). (Global Reporting Initiative)

The G20/OECD Principles of Corporate Governance similarly emphasise the importance of timely, reliable and comparable disclosure in supporting market confidence and informed decision-making (OECD, 2023). (OECD)

But transparency should not be treated as the final objective.

The real value of sustainability information is realised when it also improves governance, informs strategy, strengthens resilience and leads to better decisions and action.

Reporting should therefore serve two connected purposes:

accountability to those affected by or relying on the organisation, and better decision-making within the organisation itself.

Transparency without action may produce visibility but little improvement.

Decision-making without transparency may produce action but insufficient accountability.

Strong sustainability reporting should contribute to both.

Stronger Information Builds Stronger Resilience

Organisations are operating in an increasingly uncertain environment.

Climate impacts, geopolitical disruption, regulatory change, supply-chain instability, technological development, demographic pressures and changing customer expectations are reshaping markets and business models.

Resilience is not simply the ability to survive a crisis.

It is the ability to understand change, anticipate material consequences, adapt intelligently and continue creating value under changing conditions.

The 2023 G20/OECD Principles of Corporate Governance introduced a dedicated chapter on sustainability and resilience. The Principles recognise that governance arrangements should enable companies and investors to consider sustainability-related risks and opportunities and support the resilience of corporations and the wider economy (OECD, 2023). (OECD)

They also state that boards should ensure material sustainability matters are considered and that adequate risk-management processes are in place to address significant external risks, including supply-chain disruptions and geopolitical tensions (OECD, 2023). (OECD)

That requires reliable information.

An organisation cannot strengthen its resilience if it does not understand:

• where it is exposed
• what it depends on
• how its value chain may be affected
• which stakeholders are critical to its success
• where opportunities may be emerging
• how present decisions could affect future performance
• how environmental and social changes could influence its ability to operate

Decision-useful sustainability information allows organisations to identify these matters before they become more disruptive, costly or difficult to manage.

It gives boards and senior leaders a stronger basis for strategic adaptation.

Materiality Must Support Judgement

Materiality is central to this process.

However, materiality should not become a popularity exercise, a box-ticking process or a mechanical compliance task.

The purpose of materiality is to identify the sustainability matters that genuinely require attention, informed judgement and organisational action.

Under the GRI Standards, material topics are those representing an organisation’s most significant impacts on the economy, environment and people, including impacts on human rights. These impacts may arise through the organisation’s own activities or through its business relationships (GRI, 2021a; GRI, 2021b). (Global Reporting Initiative)

From a financial materiality perspective, IFRS S1 focuses on sustainability-related risks and opportunities that could reasonably be expected to affect an organisation’s cash flows, access to finance or cost of capital over the short, medium or long term (IFRS Foundation, 2023a).

A robust materiality process should therefore examine matters across the value chain and consider factors such as:

• the scale and scope of actual and potential impacts
• the severity and possible irremediability of harm
• financial risks and opportunities
• operational dependencies
• stakeholder evidence
• expert input
• regulatory and market developments
• strategic implications
• the organisation’s ability to respond

Stakeholder engagement is important, but materiality should not be determined by counting votes or selecting the issues mentioned most frequently.

Stakeholder input should provide evidence and insight. It should be assessed alongside operational information, scientific and technical expertise, value-chain analysis, financial considerations and management judgement.

A strong materiality process helps leaders distinguish between what is merely interesting and what is genuinely important.

It reduces noise.

It creates focus.

Most importantly, it should lead to decisions, actions, responsibilities and measurable outcomes.

From Disclosures to Value Creation

The strongest sustainability systems follow a clear path:

Disclosures lead to decisions.
Decisions lead to actions.
Actions lead to value creation.

That value should not be understood narrowly.

It may include:

• improved operational performance
• stronger governance
• better risk management
• increased organisational resilience
• greater stakeholder trust
• improved access to markets
• stronger customer relationships
• more reliable supply chains
• improved access to finance
• increased innovation
• new products, services or partnerships
• better long-term strategic positioning

The IFRS Foundation identifies potential benefits from stronger sustainability-related information in areas including governance, business strategy, access to capital, reputation and stakeholder engagement (IFRS Foundation, 2023b). (IFRS)

Good sustainability decisions should strengthen the organisation while also creating value for its stakeholders and the planet.

These objectives should not automatically be treated as mutually exclusive.

A business cannot create lasting value if it ignores the environmental systems, people, relationships and resources on which it depends.

Equally, sustainability initiatives are unlikely to remain effective if they are disconnected from the organisation’s strategy, operating model and economic viability.

The challenge is to identify practical decisions that create balanced and lasting value.

What Organisations Need

Turning sustainability information into better decisions requires several connected elements.

1. Relevant and credible information

Organisations need information that is sufficiently complete, balanced, consistent and reliable to inform judgement.

Large quantities of data are not necessarily useful. Information must relate to the decisions that leaders, investors and stakeholders need to make.

2. A robust materiality process

Materiality should identify the impacts, risks, opportunities and dependencies that genuinely require organisational attention.

It should provide focus rather than simply produce a long list of sustainability topics.

3. Value-chain understanding

Many significant impacts and business vulnerabilities occur outside an organisation’s direct operations.

Organisations therefore need to understand their upstream and downstream relationships, dependencies and exposures.

4. Clear governance and accountability

Boards, executives, operational managers and subject-matter experts must understand their respective roles.

Someone must be responsible for considering the information, making decisions, authorising action and monitoring progress.

5. Competent people

Organisations need people who can collect, assess, interpret and communicate sustainability information.

Training should not merely explain reporting requirements. It should build the capability to apply them in practice.

6. Reliable systems and evidence

Reporting processes must be capable of producing consistent and traceable information.

The evidence supporting disclosures should be sufficiently robust to withstand internal challenge and, where relevant, external assurance.

7. Independent assurance

Where appropriate, independent assurance can strengthen confidence in sustainability information and the processes used to prepare it.

The International Standard on Sustainability Assurance 5000, or ISSA 5000, provides a global, principles-based standard suitable for assurance engagements across sustainability topics and reporting frameworks. Its purpose includes strengthening trust and confidence in sustainability information among investors, regulators and other stakeholders (IAASB, 2024). (IAASB)

These elements should not operate in isolation.

Training, materiality, governance, reporting and assurance should form part of a wider decision-making system.

The Role of Boards and Senior Leaders

Boards should not receive sustainability information only when a report is ready for approval.

By that stage, many important decisions may already have been made.

Boards should use sustainability information earlier, when strategy, investment, risk appetite and resource-allocation decisions are being considered.

They should ask:

• What does this information tell us about the future of the organisation?
• Which assumptions within our strategy may no longer hold?
• Where are we most exposed?
• What are our most important environmental and social dependencies?
• What opportunities are we failing to recognise?
• Which material matters require investment or management attention?
• What trade-offs are involved?
• How confident are we in the quality of the information?
• What decisions should change as a result?
• Who is responsible for ensuring that action follows?

The G20/OECD Principles recognise that boards should guide corporate strategy, oversee risk management and ensure that material sustainability matters are considered as part of their responsibilities (OECD, 2023). (OECD)

These questions move sustainability from the edge of the reporting process to the centre of governance and strategy.

They also make sustainability information more commercially relevant.

The Role of Chambers and Business Organisations

Chambers of commerce and other business organisations can play an important role in making sustainability capability accessible.

Many businesses, particularly small and medium-sized enterprises, face increasing requests for sustainability information from customers, banks, investors, public authorities and larger companies within their supply chains.

Yet many do not have dedicated sustainability teams or the internal knowledge required to respond efficiently.

Chambers can support their members by providing:

• practical awareness
• credible training
• reporting capability
• access to relevant expertise
• shared learning
• examples of good practice
• structured implementation pathways
• access to independent assurance when appropriate

The objective should not be to surround members with more technical language or reporting complexity.

It should be to help them understand what matters, what is expected, what information they need and how sustainability can strengthen resilience, competitiveness and long-term value.

This also creates an opportunity for Chambers to position themselves as practical partners in business adaptation.

My Focus

This is the work I have increasingly chosen to focus on:

I help organisations turn sustainability information into better decisions, stronger resilience and long-term value.

That involves working with boards, senior leaders, Chambers and business organisations to connect sustainability with governance, strategy, reporting capability and credible assurance.

Training builds internal competence.

Reporting frameworks create structure and comparability.

Materiality creates focus.

Governance establishes responsibility.

Assurance strengthens confidence.

Board-level engagement connects the information to strategy, oversight and accountability.

The aim is not to create more reporting for its own sake.

The aim is to make sustainability information useful:

Useful to the organisation.

Useful to stakeholders.

Useful to investors and other users of reported information.

Useful to those responsible for making decisions.

And useful in creating lasting value for the business, its stakeholders and the planet.

The Real Test

The real test of sustainability information is not simply how much is disclosed.

It is what changes because of it.

Did the board make a better decision?

Did the organisation identify an important risk earlier?

Did it understand a significant impact more clearly?

Did it improve an operational process?

Did it strengthen its supply chain?

Did it allocate resources more intelligently?

Did it improve accountability?

Did it build greater trust?

Did it become more resilient?

Did it create long-term value?

If the answer is no, the organisation may have produced information without fully using it.

Sustainability information should not sit only at the end of the decision-making process.

It should help shape that process.

That is where its real value begins.

I welcome conversations with boards, Chambers and business leaders exploring how sustainability information can become more decision-useful, strengthen organisational resilience and support long-term value creation.

Simon Pitsillides is Founder of FBRH Consultants and publisher of SustainCase. He is a board and senior executive adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value.

He supports organisations in strengthening governance, improving decision-making and integrating sustainability into long-term business strategy. His work focuses on helping boards and leadership teams move beyond compliance by using decision-useful sustainability information to manage risk, build stakeholder confidence and create lasting value.

Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.

Through FBRH Consultants and SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.

https://www.linkedin.com/in/simon-pitsillides

References

Global Reporting Initiative (GRI) (2021a) GRI 1: Foundation 2021. Amsterdam: Global Reporting Initiative. Effective for reports or other materials published on or after 1 January 2023. (Global Reporting Initiative)

Global Reporting Initiative (GRI) (2021b) GRI 3: Material Topics 2021. Amsterdam: Global Reporting Initiative. Effective for reports or other materials published on or after 1 January 2023. (Global Reporting Initiative)

International Auditing and Assurance Standards Board (IAASB) (2024) International Standard on Sustainability Assurance 5000: General Requirements for Sustainability Assurance Engagements. New York: International Federation of Accountants. (IAASB)

IFRS Foundation (2023a) IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information. London: IFRS Foundation. (IFRS)

IFRS Foundation (2023b) Introduction to the ISSB and IFRS Sustainability Disclosure Standards. London: IFRS Foundation. (IFRS)

Organisation for Economic Co-operation and Development (OECD) (2023) G20/OECD Principles of Corporate Governance 2023. Paris: OECD Publishing. (OECD)

The post Sustainability Information Is Only Valuable When It Improves Decisions appeared first on SustainCase - Sustainability Magazine.

The organisations that succeed tomorrow will not necessarily be the largest, oldest or even the most profitable today.

They will be the organisations that recognise change early, understand its implications and adapt faster than their competitors.

This raises an important question.

How do boards know what they need to adapt to?

The answer lies in decision-useful materiality.

Materiality is not about reporting.

Too often, organisations still view materiality as the first chapter of a sustainability report.

Complete the stakeholder survey.

Produce a materiality matrix.

Publish the report.

Repeat next year.

This approach fundamentally misunderstands the purpose of materiality.

Materiality is not a reporting exercise.

It is a strategic decision-making process.

Done properly, it provides boards with an evidence-based understanding of the sustainability issues most likely to influence long-term success.

Strategy begins with understanding change.

Every organisation operates within a rapidly changing environment.

Climate risks, technological disruption, changing customer expectations, supply chain resilience, resource availability, human rights, artificial intelligence, political instability, skills shortages and evolving regulation are reshaping the way organisations operate.

Boards cannot respond effectively to every issue.

Nor should they.

Their challenge is identifying which developments matter most to their organisation and where management should focus attention.

This is precisely what materiality should achieve.

Looking across the value chain changes everything.

Many organisations still focus primarily on what happens within their own operations.

However, the greatest risks and opportunities often occur elsewhere.

They may lie within supplier relationships, customer behaviour, product use, local communities, natural resources or future regulatory developments.

Looking across the entire value chain enables organisations to identify where significant impacts, dependencies, risks and opportunities actually occur.

This provides something far more valuable than compliance.

It provides strategic intelligence.

Boards gain visibility over where disruption may emerge, where innovation is needed and where value can be created.

In short,

Materiality helps organisations focus on what matters, where it matters.

Good materiality supports adaptation.

International sustainability frameworks increasingly recognise that organisations should assess sustainability matters using objective criteria such as the scale, scope and irremediability of impacts together with financial effects, time horizons, risks and opportunities.

When these assessments are combined with meaningful stakeholder engagement and informed expert judgement, organisations develop a dynamic understanding of the environment in which they operate.

Materiality becomes an early warning system.

It helps identify emerging issues before they become business problems.

It highlights opportunities before competitors recognise them.

It enables organisations to allocate resources where they can create the greatest value for the business, stakeholders and the planet.

Boards need better questions. Not bigger reports.

Most boards already receive hundreds of pages of reports every year.

What they often lack is clarity.

Decision-useful materiality helps boards ask:

What has changed?

What matters now?

Where are the greatest risks?

Where are the greatest opportunities?

Which stakeholders are most affected?

Which sustainability issues could fundamentally reshape our business model?

Where should we invest first?

These are strategic questions.

Materiality should provide strategic answers.

Sustainability becomes a competitive advantage.

The organisations most likely to succeed in the coming decades will not be those producing the thickest sustainability reports.

They will be those making the best decisions.

Decision-useful materiality transforms sustainability from a reporting obligation into a management discipline.

It enables boards to anticipate change rather than simply react to it.

And that may prove to be one of the greatest competitive advantages an organisation can possess.

Because in a world of constant disruption, survival increasingly depends on the ability to adapt.

Materiality is not about reporting yesterday’s performance. It is about helping boards make better decisions about tomorrow.

Simon Pitsillides
Simon Pitsillides is a board adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value creation. He supports boards and senior executives in strengthening governance, enhancing decision-making and integrating sustainability into long-term business strategy.
Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.
As Founder of FBRH Consultants and publisher of SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.
Simon is recognised for helping boards move beyond compliance by using decision-useful sustainability information to strengthen strategy, manage risk, build stakeholder confidence and create long-term value for business, stakeholders and the planet.

https://www.linkedin.com/in/simon-pitsillides

References

Eccles, R.G. and Krzus, M.P. (2018) The Nordic Model: An Analysis of Leading Practices in ESG Disclosure. CPA Canada.

European Financial Reporting Advisory Group (EFRAG) (2023) ESRS 1: General Requirements.

Global Reporting Initiative (GRI) (2021) GRI 3: Material Topics 2021.

IFRS Foundation (2023) IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information.

Organisation for Economic Co-operation and Development (OECD) (2023) OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.

Porter, M.E. and Kramer, M.R. (2011) ‘Creating Shared Value’, Harvard Business Review, 89(1/2), pp. 62–77.

United Nations (2011) Guiding Principles on Business and Human Rights.

The post Adapt or Decline? Why Decision-Useful Materiality Is Becoming a Board’s Competitive Advantage appeared first on SustainCase - Sustainability Magazine.

Unfortunately, this principle is sometimes misunderstood.

In some organisations, materiality assessments appear to place excessive emphasis on the preferences of particular stakeholder groups without sufficient consideration of objective evidence, expert judgement or the organisation’s actual impacts across its value chain. The result can be well-intentioned but poorly prioritised sustainability strategies that consume resources without addressing the issues that matter most.

This is not a criticism of stakeholder engagement. On the contrary, meaningful stakeholder engagement remains one of the foundations of credible sustainability reporting. The challenge arises when stakeholder opinions become the primary determinant of materiality rather than one important input into a structured decision-making process.

Materiality requires judgement, not voting

Materiality has never been intended to operate as a popularity contest.

Leading international frameworks consistently recognise that organisations should identify and prioritise issues using structured assessment processes supported by evidence and professional judgement.

For impact materiality, this includes considering factors such as:

• Scale of impacts
• Scope of impacts
• Irremediability
• Likelihood where relevant
• Connections throughout the value chain

Financial materiality similarly requires consideration of the effects that sustainability matters may have on enterprise value over different time horizons.

These assessments require expertise, data and informed judgement. They cannot be determined solely by counting how many stakeholders support a particular issue.

The value chain changes the conversation

One of the most powerful developments in sustainability reporting has been the increasing emphasis on value chain thinking.

Every organisation affects and depends upon activities occurring both upstream and downstream. Many of the most significant sustainability impacts occur outside an organisation’s direct operations—in raw material extraction, supplier practices, product use or end-of-life management.

Viewing sustainability through the value chain helps senior decision-makers answer much more strategic questions:

• Where are our greatest impacts?
• Where are our greatest risks?
• Where are our greatest opportunities to create value?
• Which decisions will benefit both the organisation and society over the long term?

Rather than attempting to respond equally to every issue raised during stakeholder engagement, value chain analysis enables organisations to concentrate attention where intervention can make the greatest difference.

In other words, it helps organisations focus on what matters, where it matters.

Stakeholders remain essential, but they are one source of evidence

Stakeholders often possess valuable information that management may not have.

Employees understand workplace culture.

Communities understand local impacts.

Customers identify emerging expectations.

Investors highlight financial concerns.

Civil society organisations frequently bring important issues to management’s attention.

However, none of these perspectives should automatically determine materiality in isolation.

Instead, organisations should integrate stakeholder insights with:

• Scientific evidence
• Operational data
• Financial analysis
• Regulatory developments
• Sector knowledge
• Expert judgement
• Value chain analysis

Only then can management make balanced, defensible decisions.

Poor prioritisation weakens sustainability

When organisations devote disproportionate attention to issues with relatively limited impacts while overlooking more significant environmental, social or governance challenges, sustainability risks losing credibility.

Resources become diluted.

Management attention is diverted.

Reporting becomes less decision useful.

Most importantly, organisations may miss opportunities to create meaningful value for the business, stakeholders and the planet.

This concern extends beyond individual organisations. Public confidence in sustainability reporting depends upon transparent, objective and evidence-based prioritisation. Where materiality appears driven by ideology, fashion or pressure rather than disciplined analysis, confidence in sustainability reporting inevitably suffers.

Materiality should help leaders make better decisions

Senior decision-makers do not need longer lists of sustainability topics.

They need better information.

A robust materiality process should enable boards and executives to understand where significant impacts occur across the value chain, where financial effects may emerge and where strategic action can create lasting value.

That is precisely why materiality exists.

It is not designed to satisfy the loudest voices.

It is designed to improve decisions.

When organisations combine stakeholder engagement with value chain analysis, expert judgement and objective assessment criteria, sustainability becomes what it was always intended to be: a management discipline that helps organisations create lasting value for the business, stakeholders and the planet.

Simon Pitsillides
Simon Pitsillides is a board adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value creation. He supports boards and senior executives in strengthening governance, enhancing decision-making and integrating sustainability into long-term business strategy.
Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.
As Founder of FBRH Consultants and publisher of SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.
Simon is recognised for helping boards move beyond compliance by using decision-useful sustainability information to strengthen strategy, manage risk, build stakeholder confidence and create long-term value for business, stakeholders and the planet.

https://www.linkedin.com/in/simon-pitsillides

References

European Financial Reporting Advisory Group (EFRAG) (2023) European Sustainability Reporting Standard ESRS 1: General Requirements. Brussels: EFRAG.

European Union (2022) Directive (EU) 2022/2464 on Corporate Sustainability Reporting (CSRD). Official Journal of the European Union.

Global Reporting Initiative (GRI) (2021) GRI 3: Material Topics 2021. Amsterdam: Global Reporting Initiative.

International Financial Reporting Standards Foundation (IFRS Foundation) (2023) IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. London: IFRS Foundation.

Organisation for Economic Co-operation and Development (OECD) (2023) OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. Paris: OECD Publishing.

Organisation for Economic Co-operation and Development (OECD) (2018) OECD Due Diligence Guidance for Responsible Business Conduct. Paris: OECD Publishing.

United Nations (2011) Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework. New York and Geneva: United Nations.

United Nations Office of the High Commissioner for Human Rights (OHCHR) (2012) The Corporate Responsibility to Respect Human Rights: An Interpretive Guide. Geneva: United Nations.

The post Materiality Is Not a Popularity Contest: Why sustainability should be driven by evidence, value creation and disciplined decision-making appeared first on SustainCase - Sustainability Magazine.

The problem is that many of these matrices provide very little real decision-making value.

Whilst they may create the appearance of structure and prioritisation, they often fail to show:

• where impacts, risks, and opportunities occur
• which parts of the value chain are exposed
• where dependencies and vulnerabilities exist
• which business functions must act
• how decisions are being made
• how resilience is being strengthened
• where management attention and capital allocation should focus

In many cases, the matrix becomes a highly subjective exercise that lacks transparency.

Users of the report, including investors, regulators, procurement teams, lenders, customers, and other stakeholders, are frequently unable to understand:

• why a topic was positioned in a specific location
• what assumptions were used
• how severity or financial exposure were assessed
• which methodologies were applied
• which evidence supported the conclusions
• where exactly the organisation faces its greatest sustainability-related exposures

As a result, the process can unintentionally create:

• weak governance visibility
• fragmented management responses
• poor operational integration
• limited strategic usefulness
• accusations of selective prioritisation or “materiality theatre”

The reality is that many organisations stop at identifying what is material — but fail to translate materiality into structured decision-making.

This is where the value chain decision-making matrix becomes significantly more powerful.

Moving Beyond Prioritisation Toward Decision Intelligence

A value chain decision-making matrix transforms materiality from a reporting exercise into a management system.

Rather than simply ranking sustainability topics on a chart, the framework maps impacts, risks, opportunities, dependencies, resilience exposures, and value creation dynamics across the value chain.

This allows organisations to clearly identify:

• where risks originate
• where impacts occur
• where business dependencies exist
• where interventions are required
• where operational vulnerabilities may emerge
• where long-term value may be created or diminished

Most importantly, it demonstrates that management understands how sustainability issues influence operational continuity, resilience, competitiveness, and long-term business success.

For investors and other stakeholders, this is significantly more valuable than a traditional matrix because it demonstrates organisational maturity, governance capability, and preparedness.

Traditional Double Materiality Matrix vs Value Chain Decision-Making Matrix

 Why the Value Chain Perspective Matters

Many of the largest sustainability-related impacts, risks, and opportunities occur outside direct operations.

This includes:

• supply chain vulnerabilities
• logistics dependencies
• transition risks
• human rights exposures
• energy dependencies
• circular economy challenges
• customer use-phase impacts
• regulatory exposures
• climate-related disruptions

A traditional matrix often fails to clearly visualise these relationships.

By contrast, a value chain decision-making framework can map sustainability issues across:

• procurement and supplier integration
• raw material extraction
• manufacturing
• logistics
• marketing and sales
• customer use
• end-of-life and circularity

This creates significantly greater visibility and allows organisations to make more targeted and informed decisions.

Materiality Should Be Transparent

One of the largest weaknesses in modern sustainability reporting is that materiality methodologies are often poorly explained.

If materiality determines:

• what enters the report
• what receives management attention
• what receives investment
• what receives mitigation measures
• what receives governance oversight

then stakeholders should be able to understand how those decisions were made.

A robust materiality process should therefore include:

• recognised methodologies
• assumptions
• thresholds
• severity calculations
• likelihood calculations
• stakeholder engagement methods
• scoring methodologies
• references and evidence
• value chain assessment logic
• links to recognised frameworks and standards

This may include:

• GRI Standards
• ESRS
• OECD Guidelines for Multinational Enterprises
• UN Guiding Principles on Business and Human Rights (UNGPs)
• climate-related methodologies
• sector guidance
• scientific and regulatory references

A detailed methodology section demonstrates that the organisation takes materiality seriously and approaches sustainability reporting systematically, rigorously, and transparently.

This significantly strengthens:

• credibility
• defensibility
• assurance readiness
• investor confidence
• governance confidence
• decision-usefulness 

Operationalising the Integrated Reporting Value Creation Model

The Integrated Reporting Value Creation Model provides an important conceptual framework for understanding how organisations use and affect different forms of capital — financial, manufactured, intellectual, human, social and relationship, and natural capital — to create, preserve, or erode value over time. Its major strength lies in promoting integrated thinking and demonstrating the connectivity between strategy, governance, performance, risks, opportunities, and long-term value creation.

More advanced value creation models increasingly strengthen this approach by incorporating measurable inputs, outputs, impacts, stakeholder considerations, and sustainability outcomes, thereby improving transparency, accountability, and the communication of how organisations create or diminish value for the business, stakeholders, society, and the environment.

However, even sophisticated value creation models often remain primarily descriptive rather than decisional. Whilst they may explain what value is being created and provide useful visibility over outputs and impacts, they are not designed to provide detailed operational intelligence across the value chain. On their own, they do not sufficiently demonstrate where impacts, risks, opportunities, dependencies, and resilience vulnerabilities occur, nor do they clearly identify which business functions, suppliers, operational processes, stakeholder relationships, or parts of the value chain require targeted management attention, prioritised interventions, or resource allocation decisions.

This is where a Value Chain Decision Framework becomes highly complementary and strategically important. The framework operationalises the principles of Integrated Reporting by transforming broad value creation concepts into a structured governance, resilience, and decision-making system that maps impacts, risks, opportunities, dependencies, resilience exposures, and value creation dynamics across procurement, operations, logistics, customer use, and end-of-life activities. In doing so, it extends the connectivity principle of Integrated Reporting by making operational relationships, leverage points, and dependencies visible across the value chain.

Why Investors Need Operational Visibility

Without such operational visibility, value creation models risk remaining primarily strategic communication tools rather than practical management and decision-support instruments. By integrating a Value Chain Decision Framework, organisations can demonstrate not only that they understand value creation conceptually, but also that they understand precisely where value is being created, preserved, diminished, or exposed to risk — and, critically, where management attention, targeted interventions, and resource allocation are required to strengthen resilience, reduce harm, support better decisions, improve stakeholder outcomes, and enhance long-term competitiveness and sustainable value creation.

Ultimately, the objective should not simply be the creation of value for the business alone, but the creation, preservation, and protection of value for the business, stakeholders, society, and the planet. A Value Chain Decision Framework helps organisations better understand where decisions may strengthen resilience, reduce harm, improve stakeholder outcomes, allocate resources more effectively, and support long-term sustainable development across interconnected economic, environmental, and social systems.

Sustainability Reporting Should Support Better Decisions

The purpose of sustainability reporting should not simply be disclosure.

It should support:

• better decisions
• stronger governance
• improved resilience
• operational visibility
• risk management
• stakeholder confidence
• long-term value creation

This requires organisations to move beyond static materiality visuals and toward systems that support integrated decision-making across the value chain.

The organisations that will lead in the coming years will not necessarily be those producing the most disclosures.

They will be the organisations that best understand:

• where their impacts occur
• where their dependencies exist
• where risks emerge
• where resilience must be strengthened
• where value can be created for the business, stakeholders, and the planet

Simon Pitsillides
Simon Pitsillides is a board adviser specialising in sustainability governance, corporate reporting, strategy and stakeholder value creation. He supports boards and senior executives in strengthening governance, enhancing decision-making and integrating sustainability into long-term business strategy.
Simon is a Fellow of the Chartered Institute of Marketing (FCIM), a Fellow of the Institute of Sustainability and Environmental Professionals (FISEP), a Chartered Marketer, and holds an MBA in Marketing. He is also a GRI and ISEP Certified Trainer.
As Founder of FBRH Consultants and publisher of SustainCase, Simon combines strategic, commercial and governance expertise with extensive international experience in sustainability reporting, assurance readiness and value creation. He has worked with multinational organisations, financial institutions and public sector bodies across Europe, the Middle East and beyond.
Simon is recognised for helping boards move beyond compliance by using decision-useful sustainability information to strengthen strategy, manage risk, build stakeholder confidence and create long-term value for business, stakeholders and the planet.

https://www.linkedin.com/in/simon-pitsillides

The post Why Traditional Double Materiality Matrices Are Failing Decision-Makers — And What to Do Instead appeared first on SustainCase - Sustainability Magazine.

With changes under way in the sustainability reporting landscape, clarity on what the scope of the various initiatives are, as determined by their approach to materiality, is key for organisations to understand their reporting obligations.

The latest issue of The GRI Perspective – The materiality madness: why definitions matter – demystifies the recent explosion in terminology and explains the approaches of the GRI Standards (impact materiality), the IFRS’ International Sustainability Standards Board (ISSB) (financial materiality), and the incoming European Sustainability Reporting Standards (double materiality) – and how they interconnect.

The paper sets out that, to meet the expectations of stakeholders, companies have to disclose sustainability information that relates to both financial value creation and their impacts on the environment and society. Taken together, these two approaches form the basis for double materiality.

Eelco van der Enden, CEO of GRI, said:

“It stands to reason that investor-focused sustainability reporting through the financial materiality lens alone will not allow for companies to be held accountable for their impacts on the environment and people. To suggest otherwise sows confusion and underlines why we need to be clear about the differences and synergies between the various initiatives; in particular, the approaches to materiality and the audiences they serve.

At GRI, we view the ISSB’s sustainability-related disclosure plans and Europe’s incoming Corporate Sustainability Reporting Directive as complementary rather than competing. Alongside GRI’s widely-adopted standards for sustainability impacts, there are strong opportunities for alignment between all three.

We believe it is in the interests of all stakeholders to move to a two-pillar corporate reporting structure, with financial and sustainability reporting on an equal footing. The basis of this overarching system has to be double materiality. That is the only way to achieve the comparable and effective reporting needed to drive corporate accountability.”

The GRI Perspective is a regular series, launched in January 2022, which dives under the surface of topical themes in the world of sustainability reporting.

This article is based on published information by GRI. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.globalreporting.org/about-gri/news-center/understanding-materiality-can-unlock-accountability/

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This case study is based on the 2014 Sustainability Report by E.ON published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at the following link. Through all case studies, we aim to demonstrate that CSR / sustainability reporting done responsibly is achieved by identifying a company’s most important impacts on the environment and stakeholders and by measuring, managing and changing.

Abstract

Developing environmentally friendly products and services is a key priority for E.ON  Tweet This! amidst the transformation of the energy industry and its efforts to combat climate change. As a result, E.ON has been able to offer green power products, promote climate-friendly mobility through the use of Electric vehicles (EVs) and Natural-gas-powered vehicles (NPVs) and provide consumers with smart meters and energy-saving solutions. Through various partnerships and research projects E.ON has also developed smart technology for homes and commercial buildings that offers significant energy savings.

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