With most S&P 500 companies well underway on their CSRD materiality assessments, it’s not surprising that there is a fast-growing number of them that have completed – or are in the process of completing – “double” materiality assessments.
Cooley’s Michael Mencher notes that smaller companies are less likely to be on this path if they’re not subject to the CSRD, and their references to a “materiality assessment” should be carefully crafted and not exaggerated. Don’t overstate what you did if your company merely did some sort of exercise to analyze what topics to prioritize and focus on.
Bear in mind the compliance nature of disclosure documents and the liability risk that attaches. You might reconsider calling something a “materiality assessment” unless you’re subject to regulatory requirements to complete one. Instead, consider framing it as an overview of how your company has decided on which issues to prioritize.
It has become standard to include a section, and often a graph, discussing how the company analyzed which topics to focus on, but that doesn’t really mean that all these companies are undertaking new intensive processes. For most companies, their “materiality assessment” is just peer benchmarking and feedback from investors.
So don’t get caught up in the need to feel like you must keep up with larger companies that are mandated to live in a double materiality world. Many smaller companies that reference materiality assessments are not undertaking anything similar to what would be required for a CSRD double materiality exercise – such as a detailed analysis of impacts, stakeholder engagement beyond investors or supply chain mapping. Don’t make it seem like you are if you’re not.
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