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Double Materiality Assessment
How we calculate your Financial Materiality results
How we calculate your Financial Materiality results
Andrew Lingley avatar
Written by Andrew Lingley
Updated over a week ago

Interpreting the risk matrix

The colour of each tile represents a different level of risk to your company. Below is an example of a risk matrix with the colours labelled and their corresponding meaning:

  1. Critical: Almost certain to have a severe negative impact on the organisation, potentially leading to critical operational, legal, or financial challenges

  2. Significant: Likely to have a substantial adverse effect on the organisation's ESG performance and may demand immediate corrective actions.

  3. Important: Could affect the organisation's ESG performance or reputation, requiring active management and monitoring.

  4. Informative: Could potentially have a minor impact on the organisation's ESG performance or reputation, no need for active management and monitoring for now.

  5. Minimal: Unlikely to impact the organisation's ESG performance in a significant way.

There are two ways your Financial Materiality Assessment results are calculated.

  1. If at least one Risk has a rating of Critical or Significant, the system will automatically recommend that the ESG issue is Material.

  2. If at least one Opportunity has a rating of High or Medium, the system will automatically recommend that the ESG issue is Material.

Each level of Criticality in the Risk corresponds to a numeric Risk rating. This rating then triggers a Materiality recommendation.

Preliminary Financial Materiality

Material result

Critical

4

Trigger materiality recommendation

Significant

3

Trigger materiality recommendation

Important

2

Trigger materiality recommendation

Informative

1

Minimal

0

For Opportunities, High and Medium levels of Potential upside will trigger a Materiality recommendation.

Degree of Potential Upside

Material result

High

Trigger materiality recommendation

Medium

Trigger materiality recommendation

Low

Very Low

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