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Our generation of companies have a huge challenge to deal with. Enormous changes in our environment, more requirements coming from the government and more critical thinking customers that expect (and deserve!) ethical products and services. That's why it is not just a choice but a necessity for companies to think about ESG (Environment - Social - Governance).
Sustainability and corporate responsibility are no longer buzzwords, but rather, core components of the modern business environment. Companies are expected to take into account environmental, social, and governance (ESG) considerations when making decisions and developing strategies. But how do you get started? And how do you make sure it is not just a siloed side-project?
One of the first steps that companies can take to ensure they are living up to ESG standards is the double materiality matrix. Bringing together an inside-out view with an outside-in view, taking into account the environmental implications of the choices you make ànd the financial implications of those choices.
The double materiality matrix is not just a way to assess a company's current ESG-status, but also a powerful tool for developing strategies and plans to improve the company's ESG performance. By providing a comprehensive and detailed assessment, the double materiality matrix helps companies focus their efforts on the most important ESG topics and identify areas where they can and should make improvements. In addition, it is the first step in building the 1-Page Sustainability Plan.
To map the materiality matrix, we need to map our material impact on people and our planet, particularly with regard to climate change and other environmental impacts. Besides this, we also need to map what implications our material impact has on our financial value.
With this evaluation we get a clear view what potential actions have a shared value: these are the actions they need to invest in. They have the greatest opportunity for collective impact as they have high impact on planet and a firms succes, a high value to stakeholders, and have a high probability of occurrence.
This evaluation creates corporate transparency towards stakeholders, helps with reporting and makes it possible to set realistic and well-considered objectives and actions: to create a strategy.