What Matters Most? It’s Not So Clear Anymore
Materiality—the concept of determining which ESG issues truly matter—has become a central, and now contentious, feature of sustainability reporting.
A recent Financial Times article revealed that while global regulators are trying to harmonize frameworks, disagreements over materiality remain. The result: a fragmented ESG disclosure landscape that is confusing companies and frustrating investors.
“Materiality is no longer just a reporting term—it’s a legal, strategic, and reputational issue,” says Elena Spanos, ESG Counsel at a Fortune 500 tech firm.
So how should ESG professionals approach materiality in 2025?
Materiality in 2025: One Word, Many Definitions
Here’s how materiality varies across leading ESG standards:
- GRI (Global Reporting Initiative): Focuses on impact materiality—how a company affects the environment and society
- SASB (now part of ISSB): Emphasizes financial materiality—what affects enterprise value
- CSRD/ESRS (EU): Introduces double materiality—a combination of both approaches
- IFRS S1/S2: Favors financial materiality with some convergence toward climate-related impacts
In other words:
✔ What matters to one framework may not matter to another
✔ Companies operating globally must navigate all three perspectives
✔ ESG professionals must master more than just definitions—they need practical tools to prioritize and report effectively
Why This Matters to Companies
The consequences of poor materiality judgments are real. According to a 2025 World Economic Forum briefing, companies that fail to identify and report on truly material ESG risks:
- Face legal scrutiny in jurisdictions like the EU and California
- Lose investor trust for lack of transparency
- Miss strategic opportunities to lead in sustainability performance
“When we updated our materiality matrix with proper stakeholder input and climate scenario analysis, we uncovered reputational risks we’d been underestimating,” says Kiran Menon, Sustainability Officer at a North American energy company.
Case Snapshot: Two Companies, Two Approaches
Company A: Narrow Materiality, Narrow Impact
A mid-sized apparel brand followed a SASB-only framework, identifying “material” topics as energy use and data privacy. However, activist investors soon questioned why labor practices and community impact were excluded. The brand lost ESG rating points and was removed from a leading sustainability index.
Company B: Double Materiality as Strategy
A European manufacturer adopted CSRD-aligned double materiality and expanded disclosures to include biodiversity, water, and equity issues. While it required cross-departmental effort, the outcome was a higher ESG rating, more transparent stakeholder communication, and enhanced resilience.
What Professionals Need to Master
The materiality conversation in 2025 demands a new skillset:
- Stakeholder engagement methodologies
- Double materiality assessments and mapping tools
- Integration of material ESG topics into annual reports and KPIs
- Alignment across ESG frameworks (GRI, SASB, CSRD, IFRS)
This is no longer the realm of sustainability teams alone. Legal, finance, strategy, and risk officers are all involved—and professionals who can guide them are in high demand.
Two Courses to Master ESG Reporting and Materiality
To lead in this evolving space, sustainability professionals are turning to two training programs that focus on practical application of reporting frameworks and foundational ESG strategy:
Online Certificate on Sustainability (ESG) Reporting
This course helps you:
- Understand and apply GRI, SASB, TCFD, and CSRD principles
- Conduct stakeholder mapping and identify material ESG topics
- Prepare ESG disclosures aligned with leading frameworks
- Integrate ESG KPIs into annual reports and investor presentations
Best for:
Sustainability professionals, ESG report writers, risk managers, consultants
Includes real case examples, templates, and updated guidance for 2025 compliance
Diploma on Corporate Sustainability (Foundation Course)
This foundational course covers:
- ESG megatrends and regulatory drivers
- Core sustainability principles across sectors
- Materiality mapping, ESG risks, and stakeholder expectations
- Alignment between ESG strategy and the UN SDGs
Designed for:
New sustainability professionals, managers from other departments, or board members seeking ESG fluency
Includes downloadable frameworks, policy examples, and a global perspective on ESG leadership
Disclosure
This blog is part of a collaboration with the Sustainability Academy, an accredited provider of ESG and corporate sustainability training. Course recommendations reflect current market needs in materiality analysis, ESG reporting, and stakeholder engagement.
Q&A: Materiality and Reporting in 2025
Q1: What’s the biggest mistake companies make in defining materiality?
The most common mistake is treating materiality as a one-time checklist or marketing exercise. In reality, it should be a strategic process that links ESG risks and opportunities to core business decisions. Companies that fail to update their materiality assessments or ignore stakeholder input often miss emerging risks or regulatory gaps.
Q2: Can small companies afford to conduct double materiality assessments?
Yes—double materiality doesn’t require large budgets or consultants. Smaller companies can start by identifying key ESG issues with a combination of stakeholder surveys, supplier insights, and publicly available risk data. Simple tools and templates now exist to guide SMEs through basic impact and financial relevance mapping.
Q3: Will materiality ever be standardized globally?
While progress is being made toward global alignment—especially between the EU’s CSRD and IFRS S1/S2—complete standardization is unlikely. Different regions will continue to reflect their own economic, environmental, and social priorities. However, companies can reduce complexity by aligning with widely accepted frameworks like GRI, SASB, and CSRD to cover the most material topics across markets.
Final Thought: Know What Matters—and Prove It
As ESG reporting matures, materiality is no longer a technical term—it’s a leadership tool. Organizations that define, measure, and act on what matters most will not only avoid compliance pitfalls but lead on impact, resilience, and investor trust.
“You don’t need to be perfect—you need to be transparent, responsive, and aligned with what really matters to people and the planet,” says Daniela Vogt, Senior Advisor on ESG Policy at a global consultancy.