Materiality: Focusing on What Matters Most

Materiality is the process of identifying which issues are most important — both to your stakeholders and to the organization itself. It helps ensure your report is focused, relevant, and useful, not just a long list of everything your organization is doing.

Whether you're working in a nonprofit, corporation, or startup, materiality helps answer a simple question: What matters most, and to whom?

What Is Materiality?

In the context of sustainability and impact reporting, materiality means identifying the topics that are most significant based on two things:

• Their impact on people, communities, and the environment
• Their influence on the organization’s success, risk profile, or long-term value

Focusing your report around these material issues makes the content more relevant for readers — and more useful for internal strategy. It also keeps you from trying to report on everything, which often leads to unfocused or bloated reports.

Understanding Double Materiality

Many organizations now apply what’s called double materiality, especially those in Europe or those aligning with both GRI and SASB/ISSB standards.

Double materiality means looking at two perspectives:

1. Financial materiality:

What ESG topics are likely to influence your financial performance, investor decisions, or long-term value?

→ This is the lens used in ESG reporting frameworks like SASB and TCFD.

2. Impact materiality:

What topics reflect your organization’s broader social, environmental, and economic impact — regardless of financial implications?

→ This is the lens used in frameworks like GRI, B Impact Assessment, or SDG mapping.

Why does this matter?

Using both lenses gives your report balance. It ensures you’re not only focused on what affects the bottom line — but also what matters to society, communities, and the planet.

Companies increasingly combine both: for example, using GRI for stakeholder reporting and adding SASB metrics for investor disclosures.

How to Conduct a Materiality Assessment

A good materiality assessment doesn’t have to be complex, but it should be intentional. Here’s a basic process:

1. Identify your stakeholders

List who you’re accountable to or who may be affected by your work. This often includes:

• Employees and leadership
• Customers or clients
• Investors or funders
• Community partners or beneficiaries
• Regulators or policymakers

2. Gather input

Use one or more of the following:

• Surveys or interviews
• Stakeholder roundtables or listening sessions
• Insights from customer service or donor feedback
• Review of existing research, ratings, or public expectations

3. Prioritize the issues

Based on input and internal analysis, list and rank the most relevant ESG or impact topics.

Ask:

• How much does this issue matter to our stakeholders?
• How much does it affect our ability to operate or fulfill our mission?

4. Validate internally

Discuss findings with your leadership or board. Confirm whether the final list aligns with strategy, operations, and future direction.

What a Materiality Matrix Looks Like

A materiality matrix is one common way to present the results. It typically looks like a grid with two axes:

Pro tip: Use visuals if you're sharing the report externally — they help readers quickly see what matters and why.

How Materiality Looks Different by Stakeholder

Investors / Funders

What They Consider 'Material': Issues that affect long-term financial value, risk, or return

What They're Likely Looking For: Climate risk, labor practices, governance, disclosures

Employees

What They Consider 'Material': Alignment with values, workplace experience, job security

What They're Likely Looking For: DEI data, labor standards, employee engagement programs

Customers / Clients

What They Consider 'Material': Ethical practices, brand trust, product responsibility

What They're Likely Looking For: Responsible sourcing, safety, data privacy, community impact

Regulators / Policymakers

What They Consider 'Material': Compliance and contribution to public goals

What They're Likely Looking For: GHG emissions, disclosures, legal compliance, tax ethics

Communities / NGOs

What They Consider 'Material': Social and environmental outcomes in local areas

What They're Likely Looking For: Emissions, water use, human rights, community investment

Avoiding the "Kitchen Sink" Report

One of the most common pitfalls is trying to include everything — even when it's not relevant or meaningful. This creates a report that's long but hard to navigate, and it can actually dilute your credibility.

Other common mistakes:

• Including topics that aren't material just because you have data
• Copying topics from peer reports without doing your own analysis
• Only showcasing positive stories — and leaving out challenges that matter.
• Treating materiality as a one-time step, rather than something to revisit annually

Quick Tips

• Keep your materiality process proportionate to your size and goals. A small nonprofit doesn't need a global stakeholder survey.
• Document the process. Even a short explanation ("We consulted 30 employees and 10 community partners to prioritize issues") adds credibility.
• Don't avoid uncomfortable topics. If a sensitive issue is truly material, it belongs in the report — even if the story is still evolving.
• Use materiality to drive focus across the report. Repeating your priority topics throughout builds consistency and strengthens your narrative.

Bottom Line:

Materiality helps make your report more strategic, relevant, and actionable. It's not just a compliance step — it's a way to center your story on what truly matters to the people you serve, the world you affect, and the future you plan for.