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What is the MATERIALITY ANALYSIS?

A materiality analysis, also known as a materiality analysis, is an essential process for companies to identify and evaluate the most important topics and stakeholder requirements in the area of sustainability.
This analysis forms the basis for a company’s sustainability strategy and reporting.
The materiality analysis is used to identify the most significant economic, environmental and social topics that are relevant to both the company and its stakeholders.
These issues are prioritized in order to deploy resources efficiently and make strategic decisions.

PROCESS of the materiality analysis

01

Define objectives and scope

• Determining the objectives of the analysis and defining what materiality means for the company.
• Definition of organizational boundaries, i.e. which regions, units and assets are to be included.
• Definition of the status quo and a roadmap.

02

Identify and involve stakeholders– Identification of all relevant internal and external stakeholders. – Evaluate stakeholders according to their relevance and responsibilities in the roadmap. – Survey of the most important stakeholders on the relevant ESG topics.

03

Identify material topics– Creation of a comprehensive list of possible material topics (ESG topics). – Consideration of the inside-out perspective (impact of the company on the environment and society) as well as the outside-in perspective (impact of sustainability aspects on the company).

04

Define evaluation criteria– Definition of clear criteria for assessing the materiality of the identified topics. – Consideration of economic, ecological and social aspects. – Select the responsible employees and instruct them in the assessment criteria.

05

Carry out data collection and evaluation– Collect relevant data on the identified topics. – Analyze the data to understand the impact on stakeholders and the company.

06

Create a materiality matrix– Evaluate the topics according to their importance for the company and its stakeholders. – Creation of a materiality matrix that presents the results visually.

07

Validate and communicate results– Review the results with management and key stakeholders. – Transparent communication of the results, e.g. in the sustainability report.

08

Regular updating– Regular performance of the materiality analysis to take account of changes.

Who is OBLIGED?

The method is particularly important for companies that have to report in accordance with CSR guidelines, such as the Due Diligence Act or the Code of Conduct.
It is used in various industries, especially those that are required to carry out sustainability reporting.
The materiality analysis is an important element of the sustainability report, which will be mandatory for many companies from 2024 and must be carried out annually in accordance with the Corporate Sustainability Reporting Directive (CSRD).

Large companies that are required to report under the CSRD   Large companies that are required to report in accordance with the Corporate Sustainability Reporting Directive (CSRD).
The CSRD replaces the previous Non-Financial Reporting Directive (NFRD) and expands the group of companies subject to reporting requirements.
Reporting obligation in 2025, for the data year 2024.

Companies with more than 250 employees  Uompanies that are subject to the Corporate Sustainability Reporting Directive (CSRD) are companies that fulfill at least two of the following three criteria: – More than 250 employees.
– More than 50 million euros in turnover.
– More than 25 million euros in total assets Mandatory reporting in 2026, for the data year 2025.

Smaller listed companies  Smaller, listed SMEs are affected.
Mandatory reporting in 2027, for the data year 2026.
Companies that already report in accordance with the Global Reporting Initiative (GRI).

CHALLENGES to the MATERIALITY ANALYSIS

As with all other components of ESG reporting, the materiality analysis often faces the same challenges with its central role in reporting.
These can be, for example, the following focal points:

01

Data availability and quality

– Relevant data is often missing or the available data is incomplete or inaccurate.

02

Stakeholder communication– Identifying the expectations and concerns of the various stakeholders can be complex and time-consuming.

03

Complexity and scope– The materiality analysis can become very complex for large and diversified companies.

04

Integration into the corporate strategy

– It can be difficult to effectively integrate the results of the materiality analysis into the corporate strategy and objectives.

05

Dynamic changes– Key topics can change quickly due to external developments or internal changes.

06

Resource constraints– Conducting a comprehensive materiality analysis can be resource intensive.

Materiality analysis is therefore a complex but crucial process for sustainability reporting and the strategic orientation of a company.
By applying structured methods, transparent criteria and continuous stakeholder communication, most challenges can be overcome effectively.

SOLUTION of the ESSENTIALITY ANALYSIS in SOLUTION4

In order to meet the challenges of materiality analysis, there are extensive integrated modules for green controlling.
The materiality analysis module enables a comprehensive assessment and simulation of sustainability aspects.
The software, supplemented by accompanying consulting from our partner Licennium, thus helps to carry out the materiality analysis in an audit-proof manner.

01

Data availability and quality Thanks to the seamless integration of all sustainability modules, supplemented by internal databases, all necessary data is available for the materiality analysis

02

Stakeholder communicationThanks to the role system and the internal workflow, different departments can work on the topics in parallel.

03

Complexity and scope Thanks to the clear structure tree, you always have an overview of the necessary measures

04

Integration into the corporate strategy Through accompanying support at the beginning of the project, the corporate strategy is also examined in the status quo analysis.

05

Dynamic changes External developments or internal changes can be simulated and calculated quickly and easily in the integrated system.

06

Resource restrictions Thanks to the software support and its comprehensive modules, your employees can carry out the materiality analysis independently and in a resource-saving manner once they have been trained.

The AEP Solution4 materiality analysis module in AEP Solution4 enables the user to carry out a comprehensive assessment of sustainability aspects.
All aspects to be considered are listed in an outline tree.
Colored markers indicate the processing status of the tasks.
The materiality analysis activities can be assigned, scheduled and prioritized via a workflow to those responsible and task owners.
An interactive self-assessment module enables various stakeholders of the company to participate in the assessment of sustainability aspects.
The results of the stakeholder analysis can be evaluated in clear dashboards and graphics and used for further process steps in the materiality analysis.
The user receives support in finding ideas and suggestions for the description of impacts (inside-out) and opportunities/risks (outside-in) and can simulate these in advance.