NAQ can help your company carry out a double materiality analysis, which is the first step in starting work towards establishing sustainability reporting in accordance with CSRD/ESRS
Many seafood companies are preparing to report according to the EU Sustainability Directive (CSRD). The reporting must be based on a double materiality analysis, which will help the companies to prioritize important areas in their sustainability work.
The standards for sustainability reporting (ESRS) contain a total of 823 data points that can be reported on. Not all data points are equally important and relevant in all industries, and the companies themselves must identify the most relevant for their business. It is therefore essential to carry out a materiality analysis to identify how the company affects the environment, or how the business itself can be affected by climate change. The double materiality analysis also provides a good overview of the most important risks and opportunities the company faces, and how these may affect the financial situation going forward.
There are several steps involved in preparing and carrying out a double materiality analysis.
Step 1. Overview. The sustainability work includes the company’s own impact on the environment, as well as upstream and downstream in the value chain. It is often convenient to start by setting up a map of the company’s value chain and relevant stakeholders. It is also useful to obtain a rough overview of the company’s use of resources, for example which are the most important input factors in their production.
Step 2. Mapping. The next step is to establish a comprehensive overview of the company’s actual or potential impacts. This type of survey is often referred to as sustainability due diligence. In this process, it is important to capture both positive and negative impacts and cover the entire value chain. The various impacts must be assessed with regard to scale, scope and the possibility of rectification, and if the company has directly caused, contributed to or is directly connected to the impact. The work must result in an overall list of impacts, risks and opportunities (IROs), with associated financial consequences.
Step 3. Stakeholder Involvement. Stakeholder mapping provides a good starting point for recruiting key stakeholders to contribute to the company’s sustainability work. In this process, structured interviews are usually carried out with selected people who are relevant representatives of various stakeholder groups.
Step 4. Assessment. The completed mapping and stakeholder involvement provide a starting point for a closer assessment of materiality based on the probability for and consequence of various impacts, risks and opportunities. The factors that receive the highest score are assessed against a threshold value for materiality.
Step 5. Decision. The last step results in a decision, with the establishment of a final list of significant areas for further sustainability reporting.
It is important to note that the double materiality analysis only represents the starting point in sustainability reporting. Once you have carried out the double materiality analysis and defined the significant areas, it is time to set up a strategy for the sustainability work, and define targets and indicators for each individual area, and defining relevant measures.
Good systems for data capture are required to monitor whether the business succeeds in achieving its sustainability goals. This is the key purpose of sustainability reporting – to show how the company contributes to the reduction of risk and negative impact, alternatively how the company makes use of good opportunities and increases positive impact on the environment.
Contact Nina Santi (nina.santi@inaq.no) if you would like help to carry out a double materiality analysis with help from someone who knows the seafood industry.