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Materiality (in BRSR / ESG Context)

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Materiality is the framework used to identify which ESG topics matter most to an entity's stakeholders and strategy. Shapes BRSR P4 and disclosure emphasis.

Definition

Materiality in the ESG / sustainability-reporting context refers to the framework used to identify which sustainability topics are most relevant to an entity’s stakeholders, operations, and business strategy — and therefore should receive substantive disclosure emphasis.

A materiality assessment is the structured process by which an entity identifies, prioritises, and validates these topics with its stakeholders.

Single vs double materiality

Two definitional frameworks coexist:

  • Single (financial) materiality — focuses on sustainability matters that are reasonably likely to affect the entity’s financial position, performance, or cash flows. The ISSB’s IFRS S1 / S2 standards use this framework.
  • Double materiality — covers both (a) impact materiality (the entity’s impact on people and the environment) and (b) financial materiality. The European CSRD / ESRS framework uses double materiality.

The BRSR format does not formally prescribe one or the other — but the materiality assessment that supports a strong BRSR submission typically considers both lenses, particularly for the Principle 4 stakeholder narrative and the Principle 6 environmental disclosures.

Where materiality shows up in BRSR

Materiality assessment outputs feed several BRSR disclosures:

  • Section A — material risks and opportunities arising from sustainability matters
  • Principle 4 — stakeholder identification and engagement narrative (typically informed by the materiality process)
  • Principle 6 — environmental disclosures, where material environmental topics drive the substantive emphasis
  • The boundary of value-chain reporting (which value-chain partners are in scope) is itself often a materiality call