Materiality

Not every ESG topic matters equally to every business. A software company’s biggest issues might be data protection, staff wellbeing and electricity. A haulier’s will be fuel, road safety and driver welfare. Materiality is the process of deciding which topics deserve your attention and your reporting.

What it means for a small business

You will come across two versions:

• Financial materiality. Which sustainability issues could affect the business’s cash flows, costs, access to finance or value? This is the lens used by the ISSB standards and UK SRS.
• Double materiality. Financial materiality plus impact materiality: where the business has a significant effect on people or the environment, whether or not it affects the bottom line. This is the EU approach.

Large companies run formal materiality assessments with stakeholder surveys and workshops. A small business does not need to. A simple, honest conversation about where your biggest impacts and risks lie, written down in a few lines, is proportionate. The VSME Basic Module, for example, sets a standard list of disclosures for SMEs rather than asking them to run a full assessment.

Investors and B Corp assessors like to see that you have thought about what matters most to your business, rather than ticking every box equally.

An example

A 12-person online retailer decides its most material topics are packaging and delivery emissions, data protection, and fair pay for warehouse staff. It focuses its policies, targets and reporting on those, and mentions other topics briefly.

How ESG Now handles it

ESG Now does not run a formal stakeholder materiality assessment. Instead, the questionnaire covers the topics most relevant to small businesses and adapts to how you operate, skipping vehicles if you have none and adding materials if you sell products. Your action plan then ranks where to focus first. See how it works, or read what ESG means for a small business.