Triple Materiality – or how to deal with everything, all at once

The world of sustainability professionals has been abuzz for the past year with equal parts anticipation and trepidation about the tsunami of EU regulations and directives that is quickly approaching. Some have understood for some time already that the EU, with bureaucratic finesse, smoke and mirrors, is quietly manhandling the private sector towards an incredibly radical transformation of how to do business in Europe. Others may have underestimated the width and force of what is now happening. Some of them may still have an unpleasant waking up to experience. And now, the trepidation is beginning to seep into C suites and board rooms. The CSRD is now on everyone’s doorstep.

This is all good news. What we sustainability aficionados have been harping on about for decades is now finally happening. We have been shouting from our basements for so long, that it feels almost alien to be pulled into the light and given airtime, front and centre. But this also means, our jobs are changing.

From having had to spend most of our time dealing with ‘what is sustainability?’ and ‘why should we care?’, explaining, coaxing, educating and nagging, our jobs from now on are much more about the how. It is finally(!) clear that we must transform our business models, our operations, our ways of working, to adhere and contribute to the sustainable, circular, net-zero transformation. The question is: HOW?

The European Sustainability Reporting Standards (ESRS) are developed to support and drive the transformation to climate neutral, competitive, and risk-minimized business practices by 2050. At the heart of the CSRD and ESRS:s is the Double Materiality Assessment (DMA), which sheds brutal light on all the strengths and weaknesses of your business. It gives you a diagnosis - but it doesn’t provide the remedies.

Enter the Triple Materiality Assessment. In this approach, which we also call Business Materiality, we superimposed our business strategy and growth plan onto our DMA. With this three-dimensional analysis, we identified over 50 initiatives and ideas that will contribute both to enterprise value and the sustainable transformation.

Out of the many possible ideas, we selected a handful, covering perspectives across the value chain, and cross-functional ownership internally, and launched them as prioritized value-adding initiatives. The excitement across the organization throughout the process has been palpable. Here is something that makes sense to everyone, whether triggered primarily by growth or revenue targets, or by the save-the-world-Messiah-complex more typical of sustainability and communications departments. Here, both perspectives merge.

This text could also have been headlined ‘How a small company with big ambitions (and a healthy portion of hubris) tried to take on the transition, the regulatory floodwaters, and its plans for growth, all at once’. Will the Triple Materiality or Business Materiality lead us to Shangri-la, the new paradigm where sustainability and business results are truly aligned? That remains to be seen. We believe so. But for now, it has at the very least served as incredible rocket fuel (fossil free of course) for everyone involved in the process. And that is also a result.

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Anna H?gberg , Senior Partner, Mission Anew/ARC

Lina K Wiles , Chief Sustainability Officer, Adapteo Group