Before you invite colleagues to score sustainability topics, decide what the assessment must help you do. Are you identifying significant impacts, preparing information for investors, or examining both? Without that decision, a workshop can produce a persuasive chart whose axes mean different things to different participants.
Our view is that the first deliverable should be an assessment brief: intended readers, reporting basis, business boundary, time horizons and decision owners. The chart can come later. A useful assessment explains why an issue belongs in the report and what evidence supports that judgment.
The reporting lens changes the question
GRI 3 defines material topics by reference to an organization’s “most significant impacts on the economy, environment, and people, including impacts on their human rights.” [1, Introduction] This is an impact lens: attention is directed toward the effects of the organization, rather than only toward effects on its finances.
IFRS S1 paragraph 18 tests whether “omitting, misstating or obscuring that information could reasonably be expected to influence decisions” of primary users of general purpose financial reports. [2, Appendix A] The surrounding definition concerns decisions based on reports about the entity. It is a test of information for financial decision-making, not a vote on the popularity of a topic.
The IFRS Foundation and GRI explain their standards as serving distinct, complementary purposes. Some information overlaps, but not every significant impact under GRI is necessarily material under ISSB Standards. [3] Our recommendation is to preserve that distinction when reusing an assessment, rather than relabeling the same ranked list for every framework.
Double materiality keeps both routes open
The EU’s European Sustainability Reporting Standards provide the double-materiality lens. This article uses ESRS 1 from the 2023 set, as corrected in April 2024, to explain the concepts. The European Commission has since adopted a revised edition of the ESRS (Delegated Regulation (EU) 2026/1563), in force since November 10, 2026, for financial years beginning on or after January 1, 2027; EFRAG presents that set in its Knowledge Hub. [5] Confirm the edition applicable to your reporting period before using paragraph numbers in a compliance checklist. This article does not determine whether your entity must report under EU law.
Short excerpts make the definitions precise. Paragraph 43 addresses “impacts on people or the environment”; paragraph 49 addresses “material financial effects on the undertaking”; paragraph 37 identifies “impact materiality and financial materiality” as the two dimensions. [4] The impact definition covers actual or potential, positive or negative effects across time horizons, including value-chain connections. The financial definition concerns risks and opportunities affecting the business’s finances or financing. Paragraph 28 makes a matter material when either perspective, or both, is met. [4]
Exhibit: A topic can enter through either door.
| Lens | Question to investigate | Illustrative evidence to seek |
|---|---|---|
| Impact | What effects on people or the environment are significant? | Incident records, affected people’s accounts, site evidence |
| Financial | What information could affect decisions about providing resources? | Exposure analysis, financial assumptions, financing questions |
| Double | Does the matter meet either lens, or both? | Separate judgments and a record of their connection |
The lenses follow [1, 2, 4]. The evidence column is illustrative.
Take water as an example. A plant’s withdrawals might affect other water users; disruption to water supply might also affect the plant. Investigate the first through evidence about impacts and the second through evidence about business exposure. Do not assume that finding one proves the other, or that a low financial score cancels a serious impact.
Run the assessment as an evidence process
GRI 3 describes four steps: understand the organization’s context, identify impacts, assess their significance, and prioritize the most significant impacts for reporting. It describes these steps as guidance rather than standalone requirements. [1, section 1] The five steps below put that guidance to work; adapt them to your reporting basis.
First, write the brief. List the activities, locations and relationships to examine. Explain who will use the result and what reporting period it supports. Assign a person to resolve boundary questions. If someone proposes excluding a business activity, require a reason that the reviewer can assess.
Second, build an evidence list before a scoring sheet. Ask operations, procurement, finance and people responsible for workforce matters what records they hold. Add relevant external evidence and identify people whose experience is missing. Use interviews to test an account, not merely to count how often a topic is mentioned.
Third, describe issues specifically enough to assess. A broad heading such as water or labor is not yet an explanation of an impact or a financial risk. Write down the activity, affected party or business exposure, location and time horizon. Distinguish an event already observed from a possibility that requires a likelihood judgment. Label uncertain evidence and assign follow-up work.
Fourth, evaluate each lens on its own terms. Agree the decision criteria before reviewing the results. For impact assessment, GRI 3 distinguishes actual from potential impacts and uses severity and, for potential negative impacts, likelihood; potential human-rights impacts give severity precedence over likelihood. [1, Step 3] Do not substitute the average of workshop scores for the relevant criteria.
Fifth, review the conclusion and its consequences. Ask a reviewer to challenge exclusions as well as inclusions. Record what would change the decision. Identify which disclosures, data owners and management discussions follow. A materiality assessment that ends at the presentation slide has left the reporting team without instructions.
A documented judgment is more useful than a precise-looking score
Our view is that a score is useful only when a reviewer can reconstruct it. Keep the evidence, criteria, rationale and unresolved questions together. If two departments disagree, record the disagreement and how it was resolved. Avoid manufacturing precision by adding decimal places to judgments whose evidence remains uncertain.
Give the reporting team a usable output: a topic list with linked impacts, risks or opportunities; the lens that makes each matter relevant; the evidence owner; and the planned disclosures. Keep an exclusions log. This makes it possible to explain why a familiar industry issue was considered and why it did or did not cross the relevant threshold.
Before the next reporting cycle, revisit changes in activities, relationships and evidence. Our recommendation is to identify specific triggers for an earlier review rather than relying only on an annual workshop. An acquisition, a new location or new evidence of an impact may justify reopening a judgment.
To begin:
- Approve the assessment brief and reporting lens before asking anyone to score topics.
- Test a small set of issues against evidence using separate impact and financial judgments.
- Document inclusions, exclusions and uncertainty, then connect the result to disclosure owners.
Related service: ESG reporting and materiality. Talk to us.
As of November 12, 2026.
Sources
[1] Global Reporting Initiative, GRI 3: Material Topics 2021, October 5, 2021, Introduction and section 1. Retrieved November 11, 2026. Standard.
[2] IFRS Foundation, IFRS S1, June 2023, paragraphs 17–18, with paragraph 18 reproduced in Appendix A of TIG Agenda Paper 2: Identification of sustainability-related risks and consideration of risk mitigation activities, September 2024. Retrieved November 11, 2026. Publisher’s exact standard extracts. The staff discussion itself is not a standard; this citation uses the reproduced standard text.
[3] IFRS Foundation and GRI, Facilitating efficient reporting when using the GRI and ISSB Standards, May 26, 2026. Retrieved November 11, 2026. Joint statement.
[4] European Commission, Commission Delegated Regulation (EU) 2023/2772, July 31, 2023, Annex I, ESRS 1 paragraphs 28, 37, 43 and 49; EFRAG rendition includes the April 18, 2024 corrigendum. Retrieved November 11, 2026. Adopted text via EFRAG. Definitions above are short excerpts, followed by explanation; consult the linked paragraphs for their full wording.
[5] European Commission, Commission Delegated Regulation (EU) 2026/1563 (revised ESRS), adopted July 3, 2026, Official Journal L, September 21, 2026, Article 3 (in force November 10, 2026; applies to financial years beginning on or after January 1, 2027). Retrieved November 12, 2026. EUR-Lex. Also presented in EFRAG’s Knowledge Hub, retrieved November 11, 2026.
